Chartered Civil Engineer (ICE) Construction Management, Law and Commercial Practice Flashcards

24 sample cards from the Construction Management, Law and Commercial Practice deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What does a contractor's cash flow forecast (S-curve) represent, and why is the curve S-shaped?

   It plots cumulative expenditure/value against time. It is S-shaped because spend is slow at the start (mobilisation), accelerates during the main construction phase, then tails off at completion (snagging/handover). It is used to forecast funding needs and monitor progress against value.

2. Why does a contractor usually experience negative cash flow, and how is it managed?

   Because the contractor pays for labour, plant and materials before receiving payment from the client (payment lag), so outgoings precede income. It is managed through interim/monthly payments, retention release, front-end loading of rates, favourable supplier credit terms, and minimising the gap between work done and being paid.

3. What is retention in a construction contract, and how is it typically structured?

   Retention is a percentage (commonly 3-5%) withheld from each interim payment to secure performance and remedy defects. Typically half is released at practical completion and the remaining half at the end of the defects liability/rectification period once defects are made good.

4. Differentiate between risk management and value management/engineering.

   Risk management identifies, assesses and controls uncertainties (threats and opportunities) that could affect objectives. Value management/engineering systematically improves the ratio of function (or benefit) to whole-life cost, ensuring the project delivers required function at optimum cost: $\text{Value} = \dfrac{\text{Function}}{\text{Cost}}$.

5. What are the four classic strategies for responding to a project risk (threat)?

   Avoid (eliminate the cause or change the plan), Reduce/Mitigate (lower probability or impact), Transfer (e.g. insurance or contractual allocation), and Accept/Retain (tolerate it, often with a contingency). For opportunities the equivalents are exploit, enhance, share and accept.

6. How is the expected monetary value (EMV) of a risk calculated, and what is it used for?

   $EMV = P \times I$, where $P$ is the probability of the risk occurring and $I$ is its monetary impact. Summing EMVs across risks helps size a project's risk contingency and prioritise which risks to manage.

7. What is whole-life costing (WLC / life-cycle costing)?

   An appraisal of the total cost of an asset over its whole life: capital (acquisition), operation, maintenance, repair/replacement, and disposal/decommissioning costs. It enables comparison of options that have different initial and running cost profiles, rather than judging on capital cost alone.

8. How is Net Present Value (NPV) used in investment appraisal, and what is the decision rule?

   NPV discounts all future cash flows to present value: $NPV = \sum_{t=0}^{n} \dfrac{C_t}{(1+r)^{t}}$, where $C_t$ is the net cash flow in year $t$ and $r$ is the discount rate. Decision rule: accept a project if $NPV > 0$; when comparing options, choose the highest NPV.

9. What is the Internal Rate of Return (IRR), and how is it interpreted?

   The IRR is the discount rate at which a project's NPV equals zero: it solves $\sum_{t=0}^{n} \dfrac{C_t}{(1+IRR)^{t}} = 0$. A project is acceptable if its IRR exceeds the required rate of return (cost of capital/hurdle rate).

10. What is the general aim of the Health and Safety at Work etc. Act 1974, and to whom does it apply?

    It is the enabling/umbrella Act for UK occupational health and safety, placing general duties on employers, the self-employed, employees, and those in control of premises to ensure, so far as is reasonably practicable, the health, safety and welfare of workers and others affected by the work.

11. What is the employer's primary general duty under Section 2 of the Health and Safety at Work etc. Act 1974?

    To ensure, so far as is reasonably practicable, the health, safety and welfare at work of all employees - including safe plant and systems of work, safe handling/storage of substances, information, instruction, training and supervision, a safe workplace and access, and a safe working environment with welfare facilities.

12. What does the legal phrase 'so far as is reasonably practicable' (SFAIRP) require?

    It requires balancing the risk (likelihood and severity of harm) against the cost (time, trouble and money) of the measures to control it. A measure can be omitted only if its cost is grossly disproportionate to the reduction in risk it would achieve. The duty holder bears the burden of proof.

13. What is the function of the CDM Regulations 2015?

    The Construction (Design and Management) Regulations 2015 manage health, safety and welfare across the whole project lifecycle - planning, design and construction - by allocating duties, requiring coordination of information and cooperation, and ensuring risks are designed out or managed from the outset.

14. List the duty holders defined under CDM 2015.

    Client, Principal Designer, Designer, Principal Contractor, Contractor, and Workers. The Principal Designer and Principal Contractor are appointed by the client where there is more than one contractor.

15. What are the key duties of the Principal Designer under CDM 2015?

    To plan, manage, monitor and coordinate health and safety during the pre-construction (design) phase; ensure designers eliminate, reduce or control foreseeable risks; ensure cooperation and the flow of pre-construction information; and prepare/provide the health and safety file.

16. What are the key duties of the Principal Contractor under CDM 2015?

    To plan, manage, monitor and coordinate health and safety during the construction phase; prepare the construction phase plan; organise cooperation between contractors; ensure site induction, site security and welfare facilities; and provide information and training to the workforce.

17. What three key documents does CDM 2015 require, and what is each for?

    Pre-Construction Information (hazards/information given to designers and contractors before work), the Construction Phase Plan (how health and safety is managed during construction, required before work starts), and the Health and Safety File (information for future maintenance, cleaning, alteration and demolition of the structure).

18. Under CDM 2015, when must a project be notified to the HSE (form F10), and what are the thresholds?

    When construction work is scheduled to last longer than 30 working days and have more than 20 workers simultaneously at any point, or exceeds 500 person-days. The client must notify the HSE as soon as practicable before the construction phase begins.

19. What is the standard hierarchy of risk control measures (most to least effective)?

    Elimination, Substitution, Engineering controls (isolation/guarding), Administrative controls (procedures, training, signage), and Personal Protective Equipment (PPE) as the last resort. Eliminating the hazard is always preferred over controlling exposure to it.

20. What are the five steps of risk assessment as set out by the HSE?

    1) Identify the hazards; 2) Decide who might be harmed and how; 3) Evaluate the risks and decide on precautions; 4) Record the significant findings and implement them; 5) Review the assessment and update it as necessary.

21. Distinguish between a 'hazard' and a 'risk' in health and safety.

    A hazard is anything with the potential to cause harm (e.g. a deep excavation, electricity, a chemical). A risk is the likelihood that the hazard will cause harm combined with the severity of that harm. Risk is often expressed as $\text{Risk} = \text{Likelihood} \times \text{Severity}$.

22. What welfare facilities must be provided on a construction site under CDM 2015?

    Sanitary conveniences (toilets), washing facilities (with hot/cold water, soap and towels), drinking water, changing rooms and lockers for clothing/PPE, and rest facilities/canteen with means to heat food and boil water - provided so far as is reasonably practicable from the start of the project.

23. What is a 'permit to work' system and when is it used on site?

    A formal documented control system authorising specific high-risk work (e.g. confined space entry, hot works, excavation, work on live services) only after hazards are assessed and controls confirmed. It defines the work, controls, duration and responsible persons, and is signed off and cancelled on completion.

24. What is the purpose of a method statement (and a 'RAMS' document) in site safety management?

    A method statement describes the safe step-by-step sequence for carrying out a task, the resources, plant and controls. Combined with the risk assessment it forms RAMS (Risk Assessment and Method Statement), which communicates how identified risks are controlled and forms the basis of the safe system of work and briefing.

What this deck covers

Construction Management, Law and Commercial Practice flashcards FAQ